Last fall, we had Ben Felix, chief investment officer and portfolio manager at PWL Capital, and a popular podcaster, on Canadian Advisor.cast. The conversation was wide-ranging, but one point stood out.
“There are just a ton of ETFs being launched in Canada,” he said. “They’re being marketed like crazy to advisors and retail investors. And a lot of these ETFs are, I would say, not great for investors.”
Felix called it “ETF slop,” using a term in heavy rotation since both Merriam-Webster and The Economist named it 2025’s word of the year.
“I agree wholeheartedly,” said Dan Hallett, vice-president, research and principal at HighView Financial Group on this week’s edition of the podcast. “Sadly, I was talking about the very same thing back in the 2000s and late 1990s. … There was something like 2,500 mutual funds available at the time, way too much. Upwards of 90% were not worth investing in.”
Seventy years after Massachusetts Investors Trust launched the first mutual fund in 1924, there were close to 1,500 funds available to Canadian investors, according to the Securities and Investment Management Association (SIMA). By the end of last year, that number had reached 3,412 — available from 114 providers.
The ETF trajectory is on another level. It took the sector half as much time — 35 years following the Toronto Stock Exchange’s 1990 launch of Toronto Index Participation Units — to get to about 1,500 funds. SIMA reports that in 2025 alone, 49 providers had launched a total 246 new ETFs.
“The huge proliferation of product doesn’t do anybody any favours,” Hallett said. “You have to really have a lot of focus and be able to sift through a lot of noise to be able to benefit from the increased choice.”
Same goes for do-it-yourself investors, Hallett added.
‘Go with what sticks’
Morningstar reported last year that about 30% of ETFs launched in the last decade have been shuttered. If a new ETF or mutual fund hasn’t caught fire within the first few years, its days are probably numbered.
So while the industry continues to pay smart people to design shiny new things, quantity appears more important than quality.
“It is very much the, ‘throw spaghetti at the wall’ approach. You go with what sticks,” Hallett said. “The incentives are there for the businesses, so they will continue to do that.”
Hallett called out “gimmicky products” and “one-upmanship” in design. Manufacturers are placing profitability considerations ahead of investor needs. “I wouldn’t launch near the number of products that are out there,” he said.
Product manufacturers are doing something right. SIMA reported that ETF assets reached $713 billion at the end of 2025. Sales and market performance combined to deliver a 37.8% year-over-year pop. There’s plenty of smart money there too. The Financial Times reported on a Cerulli Associates study at the end of 2024 that found 37% of institutional investors planned to boost their ETF allocations in the next two years.
As difficult as it is for advisors to keep up with the volume of launches, those who do it well are adding real value.
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